Section 554 of the Montana Code of Civil Procedure, limiting
actions to enforce a special statutory director's liability to
three years, applies to liabilities incurred before its passage
under a different statute and goes with them as a qualification
when they are sued upon in other states.
If such a statute of limitations allows over a year in which to
sue upon an existing cause of action, it is sufficient. A statute
of limitations may bar an existing right as well as the remedy.
This case came here on a certificate of which the following is
the material portion:
"The plaintiff is a citizen of Montana, and the owner by
assignment of three causes of action (for goods sold and on a
promissory note) against the Obelisk Mining & Concentrating
Company, a Montana corporation. The indebtedness of the company
upon these causes of action accrued July 31, 1892, July 1, 1892,
and December 12, 1892, respectively. The defendants are and always
have been citizens and residents of Connecticut, and at all the
times mentioned in the complaint were trustees of the said Obelisk
Mining Company. The statutes of Montana provide that, within twenty
days from the first day of September, every such company shall
annually file a specified report, and if it"
"shall fail to do so, all the trustees of the company shall be
jointly and severally liable
Page 194 U. S. 452
for all of the debts of the company then existing, and for all
that shall be contracted before such report shall be made."
Section 460 of chapter 25 of the fifth division, Compiled
Statutes of Montana, which was in force when the cause of action
arose. Reenacted as section 451 of the Civil Code of Montana, which
went into effect July 1, 1895.
"The Obelisk Company failed to file certain of the required
reports, and the causes of action sued upon here, against the
defendants as trustees, to recover debts of the company, accrued
September 22, 1893, or prior thereto. This action was brought to
enforce the joint and several liability of the defendants under the
statute on July 30, 1897."
"When the cause of action accrued, the Compiled Statutes of
Montana contained these sections:"
" SEC. 45. 1. In an action for a penalty or forfeiture, when the
action is given to an individual, or to an individual and the
territory, except where the statute imposing it prescribes a
different limitation; 2, an action against a sheriff or other
officer for the escape of a prisoner arrested or imprisoned on
civil process shall be commenced within one year."
" SEC. 50. If, when the cause of action shall accrue against a
person, he is out of the territory, the action may be commenced
within the time herein limited, after his return to the territory,
and if, after the cause of action shall have accrued, he depart
from this territory, the time of his absence shall not be a part of
the time limited for the commencement of the action."
"Both of those sections were repealed by the Code of Civil
Procedure, section 3482, which went into effect July 1, 1895. On
the last-named date, the Civil Code of Montana went into effect,
containing section 451, above cited. The Code of Civil Procedure
contains a separate title, numbered II and containing four chapters
(sections 470 to 559), which deals exhaustively with 'the time of
commencing actions.' It contains these sections:"
" SEC. 515. Within two years: "
Page 194 U. S. 453
" 1. An action upon a statute for a penalty or forfeiture, when
the action is given to an individual, or to an individual and the
state, except when the statute imposing and the state, except when
the statute imposing it prescribes a different limitation"
" SEC. 541. If, when the cause of action accrues against a
person, he is out of the state, the action may be commenced within
the term herein limited after his return to the state, and if,
after the cause of action accrues, he departs from the state, the
time of his absence is not part of the time limited for the
commencement of the action."
" SEC. 554. This title does not affect actions against directors
or stockholders of a corporation, to recover a penalty or
forfeiture imposed, or to enforce a liability created by law, but
such actions must be brought within three years after the discovery
by the aggrieved party of the facts upon which the penalty of
forfeiture attached or the liability created (
sic)."
"Upon the facts above set forth, the question of law concerning
which this Court desires the instruction of the Supreme Court, for
its proper decision, is:"
" May a defendant, in an action of the kind specified in section
554 of the Code of Civil Procedure of Montana, avail of the
limitation therein prescribed, when the action is brought against
him in the court of another state?"
MR. JUSTICE HOLMES delivered the opinion of the Court.
The general theory on which an action is maintained upon a cause
which accrued in another jurisdiction is that the liability is an
obligatio, which, having been attached to the person by
the law then having that person within its power, will be
Page 194 U. S. 454
treated by other countries as accompanying the person when
brought before their courts. But, as the source of the obligation
is the foreign law, the defendant, generally speaking, is entitled
to the benefit of whatever conditions and limitations the foreign
law creates.
Slater v. Mexican National Railroad,
194 U. S. 120. It
is true that this general proposition is qualified by the fact that
the ordinary limitations of actions are treated as laws of
procedure, and as belonging to the
lex fori, as affecting
the remedy only, and not the right. But in cases where it has been
possible to escape from that qualification by a reasonable
distinction, courts have been willing to treat limitations of time
as standing like other limitations, and cutting down the
defendant's liability wherever he is sued. The common case is where
a statute creates a new liability, and in the same section or in
the same act limits the time within which it can be enforced,
whether using words of condition or not.
The Harrisburg,
119 U. S. 199. But
the fact that the limitation is contained in the same section or
the same statute is material only as bearing on construction. It is
merely a ground for saying that the limitation goes to the right
created, and accompanies the obligation everywhere. The same
conclusion would be reached if the limitation was in a different
statute, provided it was directed to the newly created liability so
specifically as to warrant saying that it qualified the right.
If, then, the only question were one of construction and as to
liabilities subsequently incurred, it would be a comparatively easy
matter to say that section 554 of the Montana Code of Civil
Procedure qualifies the liability imposed upon directors by section
451 of the Civil Code, and creates a condition to the corresponding
right of action against them, which goes with it into any
jurisdiction where the action may be brought. But the question
certified raises greater difficulties both as to construction and
as to power. We have first to consider whether section 554 purports
to qualify, or to impose a condition upon, liabilities already
incurred under the earlier act taken up into section 451. In doing
so, we assume that the
Page 194 U. S. 455
word "directors" in the later act means the same as "trustees"
in the earlier one. The contrary was not suggested.
At the argument, we were pressed with section 3455 of the Code
of Civil Procedure: "No action or proceeding commenced before this
Code takes effect, and no right accrued, is affected by its
provisions." But the trouble made by this is more seeming than
real. The following section deals specifically with limitations,
and must be taken to override a merely general precaution against
the disturbance of vested rights. By section 3456:
"When a limitation or period of time prescribed in any existing
statute for acquiring a right or barring a remedy, or for any other
purpose, has begun to run before this Code goes into effect, and
the same or any limitation is prescribed in this Code, the time
which has already run shall be deemed part of the time prescribed
as such limitation by this Code."
The language clearly imports that the limitations in the Code
are to apply to existing obligations upon which the previous
limitation already had begun to run. The result is that section 554
purports to substitute a three years' limitation for the one year
previously in force, assuming that the previous one year limitation
applied to this case, as, under the decisions, it did.
State
Savings Bank v. Johnson, 18 Mont. 440;
Park Bank v.
Remsen, 158 U. S. 337,
158 U. S. 342.
But if section 554 purported to make this substitution, it
purported to introduce important changes. It lengthened the time,
on the one hand, but it took away the exception in case of absence
from the state, on the other. This last is disputed, but it seems
to us a part of the meaning of the words "[t]his title does not
affect actions against directors," etc. The section as to absence
from the state is a part of the title, and whatever necessary
exceptions may be made from the generality of the words quoted,
this is not one of them.
A further difference is that, while there might be difficulties
in construing the general limitation upon actions for penalties as
going to the right, this section is so specific that it hardly can
mean anything else. We express no opinion as to the earlier act,
but we think that this section 554 so definitely deals
Page 194 U. S. 456
with the liability sought to be enforced that, upon the
principles heretofore established, it must be taken to effect its
substance so far as it can, although passed at a different time
from the statute by which that liability first was created. We do
not go beyond the case before us. Different considerations might
apply to the ordinary statutes as to stockholders. We express no
opinion with regard to that.
We come, then, to the question of power. It is said that a
statute of limitations cannot take away an existing right, but only
remedies, and therefore that, whatever the effect of section 554 on
subsequently accruing liabilities, it cannot bar the plaintiff in
this suit. Before considering this, it is to be observed in the
first place that, so far as the State of Montana was concerned, the
only practical difference made by the statute was to take away the
allowance for absence from the state, while giving over a year for
the prosecution of the action within it. The cause of action
accrued on September 22, 1893, and the new statute went into effect
on July 1, 1895, so that the plaintiffs had at least until
September 22, 1896, in which to sue there. As to action within the
state, it could not be contended that the change took away
constitutional rights. It did not shorten liability unreasonably.
Wheeler v. Jackson, 137 U. S. 245. The
only way in which it could be made out that the attempt to take
away a remedy outside the state after the same lapse of time was
unconstitutional is through the theoretical proposition which we
have state. It is said that remedies outside the state can be
affected only by destroying the right, and that no statute of
limitations can do that.
It is quite incredible that such an unsubstantial distinction
should find a place in constitutional law. Prescription which
applies to easement the analogy of the statute of limitations
unquestionably vests a title. There is no such thing as a merely
possessory easement. A disseisor of a dominant estate may get an
easement which already is attached to it, but the easement is
attached to the land by title, or not at all. Again, as to land,
the distinction amounts to nothing, because to deny
Page 194 U. S. 457
all remedy, direct or indirect, within the state is practically
to deny the right. "The lapse of time limited by such statutes not
only bars the remedy, but it extinguishes the right, and vests a
perfect title in the adverse holder."
Leffingwell v.
Warren, 2 Black 599,
67 U. S. 605.
So far as we have observed, the cases which have had occasion to
deal with the matter generally hold that the title to chattels,
even, passes where the statute has run.
Campbell v. Holt,
115 U. S. 620,
115 U. S. 623;
Chapin v. Freeland, 142 Mass. 383, 386. Property is
protected because such protection answers a demand of human nature,
and therefore takes the place of a fight. But that demand is not
founded more certainly by creation or discovery than it is by the
lapse of time, which gradually shapes the mind to expect and demand
the continuance of what it actually and long has enjoyed, even if
without right, and dissociates it from a like demand of even a
right which long has been denied.
Dunbar v. Boston &
Providence Railroad, 181 Mass. 383, 385. Constitutions are
intended to preserve practical and substantial rights, not to
maintain theories. It is pretty safe to assume that, when the law
may deprive a man of all the benefits of what once was his, it may
deprive him of technical title as well. That it may do so is shown
sufficiently by the cases which we have cited and many others.
In the case at bar, the question comes up in the most attenuated
form. The law is dealing not with tangible property, but with a
cause of action of its own creation. The essential feature of that
cause of action is that it is one in the jurisdiction which created
it; that it is one elsewhere is a more or less accidental incident.
If the laws of Montana can set the limitation to the domestic suit,
it is the least possible stretch to say that they may set it also
to a foreign action, even if to that extent an existing obstacle in
the way, and we are of opinion that they have purported to do it
and have done it.
The question is answered in the affirmative, and it will be
so certified.
